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Derivative strategy on Tata Steel by MOSL

Chandan Taparia/Mumbai 03 Mar 17 | 08:07 AM

Derivative strategy on Tata Steel by Chandan Taparia of Motilal Oswal Securities:

Option Strategy

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Tata Steel: Bull Call Spread

Buy 520 CE 1 lot

Sell 530 CE 1 lot

Rationale

1. Tata steel had seen traces of short covering in last series and a strong rollover too

2. Proximity of stock towards its highest call raises expectation of a breakout

3. Follow through movement above 500 could lead to aggressive unwinding in 500 CE propelling the momentum on higher side.

4. Thus trading strategy, OTM Bull Call Spread is recommended

Target: Rs 9,000   

            

Stop Loss: Rs 4,000

Disclaimer: Motilal Oswal Securities ( MOSL ) is regulated by the Securities and Exchange Board of India ("SEBI") and is licensed to carry on the business of broking, depository services and related activities. MOSL is in the process of getting registered under SEBI - Research Analyst Regulations. MOSL, the spokesperson or his relatives, do not have financial interest in the securities mentioned above. The spokesperson has not served as a director, employee or officer at the subject company in the last 12 months. MOSL or its associate might be involved in market making for the subject company or have potential conflict of interest.

Chandan Taparia is a Deivatives and Technical Analyst at Motilal Oswal Securities.

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Sensex

Company Price Gain (%)
Cipla608.652.64
H D F C1,701.002.23
Maruti Suzuki8,340.702.15
Tata Steel701.352.14
Tata Motors421.451.92

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